Inside Market Research

A marketing research practitioner's examination of some of the interesting facets of the survey research business.

Friday, June 09, 2006

Comparison of churn rates

One of the most closely guarded secrets in business seems to be the churn rate. This is the rate of attrition, over a period of time, that subscriber-based customers "churn out" (unsubscribe) of the customer base. Churn rates are often measured in monthly terms, especially in the cable and satellite television and the wireless telephone industries. Business analysts will often look at the churn rate on a quarterly basis. Likewise, an annual rate of churn is a commonly used measure.

Recently, I got to searching the Internet for a comprehensive list of churn rates, if such a thing existed. A churn rate table, across industries. But alas, nobody seems to have compiled a database measuring the percent of customers who churn out of various companies, across sectors. So, I had no choice but to create such a table.

If you try to discover reported churn rates, the first thing you'll notice is that companies will use various time periods as the basis. Monthly, quarterly, annually. I even found one study of lawyer retention rates that spanned a four-year period. So, to try to make this an apples to apples comparison, I converted all of the churn rates I found to "per year" terms. Note, however, if a company reported a 2% monthly churn rate, I did not say that equates to a 24% annual rate (2% times twelve months). Rather, I calculated a sliding count, such that in the first month, 100 customers would dwindle to 98. But in the second month, the 98 customers would decrease to only 96.04 customers (98 minus 2% of 98).

The table below expresses 67 different churn rates at different companies in different industries at different times. As I discover more churn rates in my travels, I will update my spreadsheet and occasionally edit this chart. I'm quite certain that I will get feedback in the Comments section, pointing out the perceived errors in my table, or suggesting new data points worthy of adding. I look forward to that! For verification, I have placed a link at the bottom of the table, showing the source material for this table. It would be fantastic if this post became the Internet's number-one repository of publicly available churn rates.

Since I've put in some backbreaking coding work creating this table, I would at least appreciate that if you use it and get value out of it, please return a favor by subscribing to my blog via FeedBlitz. Just type your e-mail address into that form over there, on the right. That way, you'll be updated when I have something new to report.